BRIGHT BAY PROPERTY SERVICE (PTY) LTD v THE MORAVIAN CHURCH IN SOUTH
AFRCA 2013 (3) SA 78 (WCC)
Importance
Parties
Facts
This is an interesting and useful case that examines the intersections
among an agreement between a mining company and a landowner
regarding support rendered by the latter to the former in respect of
mining activities on the land; zoning restrictions; s 56(c) of the MPRDA
(dealing with the lapsing of a mining authorization upon deregistration
of a company); and the provisions of company law dealing with the
deregistration of companies. The case is another example of the
successful operationalization of the Maccsand decision: After it
became aware that the property was zoned for agriculture and not
mining, and that a rezoning application needed to be submitted, the
landowner was no longer willing to allow mining to continue on its
property. This, however, was not the central issue in the case which
turned rather on the consequences of the mining company having
become deregistered for both the validity of the mining permits
granted to it and its capacity to enforce the agreement with the
landowner. The court found that while the company had been reregistered, there was nothing in the new Companies Act that deemed
the company’s actions during its period of deregistration to be valid,
or for the court to make an order in this regard. The company’s mining
permits had also lapsed immediately upon deregistration. This
potentially opens up a new ground for environmental activism, in
terms of tracking which companies have become deregistered in terms
of the Companies Act, 2008 (as a result, for instance of failing to
submit an annual return) – following this decision any MPRDA
authorizations granted to such companies would immediately lapse.
Applicant: Bright Bay Property Service (Pty) Ltd
Respondent: Moravian Church in South Africa
The Moravian Church was the owner of a farm situated in the
Hermanus Municipal area. In 2006 the Church entered into an
agreement with Bright Bay Property Service (Pty) Ltd (Bright Bay) in
terms of which it granted Bright Bay permission to “prospect and trade
for minerals” on its property in exchange for payment of a royalty. In
terms of clause 6 of this agreement, the Church undertook to take all
steps, procedures and processes necessary in order for Bright Bay to
obtain the necessary permits, licences, permissions and approvals
from the appropriate authority in order to mine. The agreement
became effective on the date when a mining permit was obtained,
which occurred on 24 August 2007, and was valid for a five-year period
with the option of extending this for a further five-year period. Notice
in this regard was given on 31 January 2011. Mining commenced on
the property from August 2007.
During July 2010, however, the Church received correspondence
from the Overstrand Municipality in which it was stated that the
property was zoned for agricultural use in terms of the Zoning Scheme
Regulations promulgated under the Land Use Planning Ordinance 15
of 1985 (LUPO). In April 2011 the Church was advised that it would
need to submit an application in terms of the LUPO in order for mining
activities to take place on the farm. As a result of this correspondence
the Church formed a view that Bright Bay’s mining activities were
unlawful and should stop. It appears that they interdicted Bright Bay
from mining on the property in August 2011.
In order to rezone the property Bright Bay needed the assistance
and support of the Church (as landowner) to enable it to obtain
approval from the Municipality. From October 2011 Bright Bay began
to rely upon the provisions of the agreement in order to compel the
Church to provide it with a Special Power of Attorney to allow Bright
Bay to make a departure from the zoning conditions in order to
proceed with its mining activities. The Church, however, was unwilling
to provide this support and as a result Bright Bay instituted legal
proceedings to compel the Church to act in accordance with the
agreement.
A fact central to the dispute was that Bright Bay was deregistered
as a company on 16 July 2010 in terms of the Companies Act 61 of
1973 (old Companies Act), and reinstated as a company under the new
Companies Act 71 of 2008 only on 16 February 2012. There was thus
an intervening period of 19 months in which the company, strictly
speaking, did not exist in law and had no corporate personality. It was
during this time, on 28 August 2011, that the DMR also issued Bright
Bay with a new mining permit.
The Church refused to comply with the agreement and opposed
the application on the basis, firstly, that when Bright Bay was
deregistered in July 2010 the 2007 mining permit issued by the DME
lapsed and became of no force or effect. The legal authority for this
proposition is s 56(c) of the MPRDA, which provides as follows:
“Any right, permit, permission or licence granted or issued in
terms of this Act shall lapse, whenever … A company or close
corporation is deregistered in terms of the relevant Acts and no
application has been made or was made to the Minister for the
consent in terms of section 11 or such permission has been
refused.”
Relief Sought
Legal Issues
Judgment
Secondly, it contended that when the applicant applied for a new
mining permit in August 2011 it was still deregistered. Both the
application and the granting of the mining permit were therefore
unlawful. It was thus argued that as a result of these circumstances a
resolutive clause in the agreement was fulfilled and the applicant had
no further rights whatsoever in terms of the agreement.
An order compelling the Church to comply with the conditions of an
agreement whereby it undertook to take all steps, procedures and
processes necessary in order for Bright Bay to continue with its mining
operations.
& Issue 1: What was the effect of the deregistration of Bright Bay on the
acts performed by it in the period between its deregistration and reregistration?
Judgment: Bright Bay argued that the provisions of s 73(6A) of the old
Companies Act governed its deregistration. This provision stated that
where a company has been deregistered as a result of failing to lodge
an annual return, the Registrar of Companies may restore the
registration of the company “and thereupon the company shall be
deemed to have continued in existence as if it had not been
deregistered” (para 17). Based on this rule, Bright Bay’s counsel
argued that deregistration was of no consequence and that the
agreement (and the acts performed by the company during this
period) consequently remained valid at all relevant times (para 18).
Henney J, however, had “various difficulties with this submission
(para 19). He firstly pointed out that s 82(3) and 82(4) of the new
Companies Act, which deal with deregistration of companies, did not
have a similar deeming provision as previously contained in s 73(6A)
(para 21). He then noted conflicting precedents in the Western Cape
High Court in which courts’ powers to order the restoration of a
company had been considered. In Peninsula Eye Clinic v Newlands
Surgical Clinic 2012 (4) SA 484 (WCC) the court had decided that the
reinstatement of companies deregistered in terms of s 82(3) of the
Companies Act fell exclusively within the province of the Companies
and Intellectual Property Commission, and that there was no provision
in the 2008 Act for the court to order restoration of registration. In
coming to this conclusion the court noted that the new Companies Act
did not include a provision equivalent to the former retrospectivity
provisions in s 73(6A) (para 22). A conflicting opinion, however, had
been expressed in Fintech (Pty) Ltd v Awake Solutions ZASGH (8
October 2012) in which the court had found it could exercise its
inherent jurisdiction to validate anything done by or against a
deregistered company between deregistration and re-instatement
(para 26). Henney expressed disagreement with the latter decision on
the basis that the court could not exercise its inherent jurisdiction to
grant relief where no provision is made for such relief in terms of the
law (paras 28–29).
Henney J opined that if Parliament had wanted to retain the
retrospectivity related to deregistration it would have enacted similar
or identical provisions or would have specified other transitional
arrangements (as for example had occurred in Schedule 5 with regard
to the winding up of companies). The judge therefore concluded that
in terms of the new Companies Act it was the intention of the
legislature not to retain the retrospective provision of the previous
Companies Act (para 24). There was nothing in the new Companies Act
to suggest that where deregistration has occurred prior to the
effective date of the new Companies Act, and reinstatement in terms
of the old Companies Act has not been concluded, that the provisions
relating to deregistration, reinstatement and the consequences
thereof in terms of the old Companies Act would be applicable (para
32). The transitional measures set forth in Schedule 5 of the new
Companies Act also lent no support to this claim (paras 33–34).
Having established that Bright Bay could not have been deemed to
exist during the period of its deregistration, and that the court had no
inherent power to make any order in this regard, Henney J concluded
that as a consequence any action Bright Bay undertook during the
period of deregistration would be of no legal force or effect due to the
company lacking corporate personality (paras 35–36). Flowing from
this conclusion, the court found that the first mining permit granted to
Bright Bay lapsed on 16 July 2010, the day the company was
Outcome
registered, by virtue of s 56(c) of the MPRDA (para 38). Secondly, the
second mining permit granted in August 2011 had been issued to a
non-existing entity and was therefore also void (para 37). Because
there was no permit in place, Bright Bay was not mining lawfully on
the property, and no effect could be given to the agreement (paras 40,
42).
The court further dismissed Bright Bay’s contention that the DMR
regarded the permit issued as valid despite the provisions of s 56. In
this regard Henney J stated: “The Department acts merely as a
functionary to implement the Act. The provisions of the Act are clear
notwithstanding the Department’s attitude. The jurisdictional fact is
that before a permit can be issued a company has to be registered”
(para 44).
Finally, the court also noted that even if the retrospectivity
provisions of the old Companies Act validated the acts undertaken by a
company during a period of deregistration, a lapsed permit under the
MPRDA could not be validated (para 46).
In conclusion the court held that Bright Bay was currently not the
holder of a valid mining permit and could not demand specific
performance in terms of the agreement.
Bright Bay’s application to enforce the provisions of its agreement
with the Church was dismissed.